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Wpisy użytkownika michalskig z dnia 18 kwietnia 2009

Liczba wpisów: 6

michalskig
 
michalskig:
Grzegorz Michalski
przebieg pracy naukowej i zawodowej
1.    Wykształcenie:
•    Uniwersytet Ekonomiczny we Wrocławiu (d. Akademia Ekonomiczna we Wrocławiu), studia magisterskie 1993-1998, mgr, 1998
•    Uniwersytet Ekonomiczny we Wrocławiu (d. Akademia Ekonomiczna we Wrocławiu), studia doktoranckie 1998-2002.
2.    Stopnie i tytuły naukowe:
•    Doktor nauk ekonomicznych, w zakresie ekonomii, specjalność: finanse
3.    Dorobek pracy badawczej:
Dorobek (pełne, jednoosobowe autorstwo) zawarty jest w ponad 50 (65)  pracach opublikowanych z czasopismach lub rozdziałach monografii krajowych i zagranicznych, 5 monografiach, 2 podręcznikach oraz (współautorstwo) 3 (4) podręczników.
•    Pracę badawczą rozpocząłem pod opieką i kierunkiem profesora W. Pluty. Tematem był problem wartości płynności finansowej podmiotu (ocenianej z punktu widzenia przedsiębiorstwa).  Praca była wspierana grantem KBN: 5 H02D 046 21. Wyniki zostały zebrane w pracy doktorskiej pt. Wartość płynności w bieżącym zarządzaniu finansami, obronionej w 2002 r., na podstawie której przygotowano monografię opublikowaną w 2004 r. przez wydawnictwo CeDeWu w Warszawie.
•    Po obronie pracy doktorskiej zainteresował mnie problem istnienia i istotności wpływu decyzji i działań przedsiębiorstw w zakresie zarządzania składnikami aktywów bieżących (należności, zapasy, środki pieniężne) na wartość przedsiębiorstwa.
o    Pierwszym krokiem do zrozumienia finansowych relacji zachodzących w przedsiębiorstwie, było dla mnie studium na temat strategii finansowych przedsiębiorstwa i procesów związanych z zarządzaniem finansami w przedsiębiorstwie. Efektem tych prac było przygotowanie i wydanie trzech monografii:  Podstawy zarządzania finansami przedsiębiorstwa, (WSZ Edukacja, Wrocław 2003), Finansowe strategie przedsiębiorstwa, (WSZiA Opole 2004), Krótkoterminowe zarządzanie kapitałem, (C.H. Beck, Warszawa 2005, współautor 20%: W. Pluta, G. Michalski: 80%)  oraz wydania Leksykonu zarządzania finansami, (C.H. Beck, Warszawa 2004).
o    Następnie zainteresowałem się zagadnieniem związanym z analogicznymi relacjami zachodzącymi w przedsiębiorstwach w zależności od ich wielkości. Efektem tego były prace związane z analizą finansowych procesów decyzyjnych zachodzących w małych i średnich przedsiębiorstwach. Po pewnym czasie stałem się zwolennikiem poglądu, że bardziej odpowiedni w warunkach polskich może być podział wyodrębniający mikro i małe przedsiębiorstwa (MiMP) od średnich i dużych. W wyniku tych dociekań powstały dwie monografie: Płynność finansowa w małych i średnich przedsiębiorstwach, (WN PWN, Warszawa 2005) oraz Tajniki finansowego sukcesu dla mikrofilm, (C. H. Beck, Warszawa 2007, współautor 50%: K. Prędkiewicz, G. Michalski: 50%) .
o    Podsumowaniem badań w zakresie wpływu decyzji kształtujących poziom aktywów jest praca habilitacyjna.
4.    Działalność dydaktyczna:
•    Uniwersytet Ekonomiczny we Wrocławiu (Akademia Ekonomiczna we Wrocławiu):
o    Doktorant 1998 – 2002
o    Asystent 2002 – 2003
o    Adiunkt od 2003
•    Wyższa Szkoła Zarządzania i Administracji w Opolu:
o    Adiunkt od 2005
•    Szkolenia i doradztwo dla przedsiębiorstw realizowane we współpracy z Wolters Kluwer Polska (d. KiK), Informedia Polska, Bomis Progress, AVENHANSEN, ADS Consulting, Framax, Interfart, i wieloma innymi:
o    Trener / Doradca od 2005
5.    Działalność w czasopismach naukowych:
•    Journal Problems and Perspectives in Management:
o    Członek komitetu redakcyjnego (Editorial Board) od 2008
•    Journal of Information and Organizational Sciences, ISSN: 1846-9418:
o    Recenzent od 2008
•    Journal of Multinational Financial Management ISSN: 1042-444X (Elsevier):
o    Recenzent od 2009
6.    Członkostwo w organizacjach naukowych:
•    European Finance Association (EFA),
•    American Finance Association (AFA),
•    Polskie Stowarzyszenie Finansów i Bankowości (PSFiB).
7.    Nagrody i wyróżnienia:
•    Indywidualna nagroda Rektora Akademii Ekonomicznej:
o    Stopnia pierwszego, (za 2007 r.)
•    Indywidualna nagroda Rektora Akademii Ekonomicznej:
o    Stopnia drugiego, czterokrotnie (za 2003, 2004, 2005 i 2006 r.)
•    Nominacja do nagrody „Złote Skrzydła”:
o    Za monografie: Tajniki finansowego sukcesu dla mikrofirm, w roku 2008.


Streszczenie
Specjalista w zakresie finansów przedsiębiorstwa. Doktor nauk ekonomicznych  (2002). Adiunkt Katedry Finansów Przedsiębiorstwa i Zarządzania Wartością w Instytucie Zarządzania Finansami Uniwersytetu Ekonomicznego we Wrocławiu oraz w Zakładzie Finansów i Rachunkowości na Wydziale Ekonomicznym Wyższej Szkoły Zarządzania i Administracji w Opolu. Trener i konsultant współpracujący z najlepszymi firmami doradczo - szkoleniowymi. Autor i współautor licznych publikacji (min: Leksykon zarządzania finansami, Warszawa 2004; Wartość płynności w bieżącym zarządzaniu finansami, Warszawa 2004; Płynność finansowa w małych i średnich przedsiębiorstwach, Warszawa 2005; Krótkoterminowe zarządzanie kapitałem, Warszawa 2005; Tajniki finansowego sukcesu dla mikrofirm, Warszawa 2007 itp.). Członek rady naukowej międzynarodowego czasopisma z zakresu zarządzania przedsiębiorstwem: Problems and Perspectives in Management (PPM). Członek branżowych stowarzyszeń, takich jak: European Finance Association (EFA), American Finance Association (AFA), Polskiego Stowarzyszenia Finansów i Bankowości (PSFiB).


WYKAZ WYBRANYCH PUBLIKACJI NAUKOWYCH i DYDAKTYCZNYCH
przygotowanych i/lub opublikowanych po obronie pracy doktorskiej
***
Artykuły w czasopismach recenzowanych i pojedyncze rozdziały w monografiach:

[1]        2009    Риски и капитальные затраты: влияние Джереми-фонда на создание капитала малых предприятий, [G. Michalski, autorstwo = 100%], Регион: экономика и социология 2009; 292(1):238-250, (Risks and capital costs: how JEREMIE fund initiative helps to create SME capital, Journal Region: Economics and Sociology).
[2]        2008    A portfolio management approach in accounts receivable management, [G. Michalski, autorstwo 100%], SOUTH EAST EUROPEAN JOURNAL OF ECONOMICS AND BUSINESS, vol. 3 / no. 2, Sarajevo November 2008, ISSN 1840-118X, s. 89-95.
[3]        2008    Inventory and risk management: decreasing delivery risk of purchasers, [G. Michalski, autorstwo 100%], ROMANIAN JOURNAL OF ECONOMICS (ISSN 1220-5567), 2008, vol. 27, no. 2(36), s. 95-103.
[4]        2008    Factoring and the firm value, [G. Michalski, autorstwo 100%], FACTA UNIVERSITATIS, Series: Economics and Organization (ISSN  0354-4699), 2008; 5(1), s. 31-38.
[5]        2008    Cash management models In firm with seasonal production, [G. Michalski, autorstwo 100%], PROCEEDINGS 12th International Scientific Conference, AIESA, Building of society based on knowledge, Bratislava 2008, ISBN 978-80-8078-233-7.
[6]        2008    Value Based Working Capital Level, [G. Michalski, autorstwo = 100%], MANAGEMENT (ISSN 1820-0222), 2008; 13(49), s. 13-22.
[7]        2008    Managing risk: factoring influence on the enterprise value, [G. Michalski, autorstwo = 100%], MANAGEMENT (ISSN 1820-0222), 2008; 13(50), s. 93-100.
[8]        2008    Determinants of accounts receivable level, [G. Michalski, autorstwo = 100%], ACTA OECONOMICA PRAGENSIA (ISSN 0572-3043), 2008; 16(5), s. 47-56.
[9]        2008    Corporate inventory management with value maximization in view. [G. Michalski, autorstwo = 100%], Agricultural Economics , 54/2008(5), ISSN 0139 – 570X, 2008, s.187-192.
[10]        2008    Decreasing negative delivery risk influence on the recipents firm value: portfolio approach, [G. Michalski, autorstwo 100%], ICBE 2008, Management & Marketing, C. Chiru i inni (red.), Constanza 2008, ISBN 978-973-692-233-6, s. 50-56.
[11]        2008    Decreasing operating risk in accounts receivable management: influence of the factoring on the firm value, [G. Michalski, autorstwo 100%], MANAGING AND MODELING OF FINANCIAL RISK, D. Dluhosova (red.), VSB – Technical University of Ostrava, Ostrava 2008, ISBN 978-80-248-1846-7, s. 130-137.  
[12]        2008    Faktoring i jego wpływ na wzrost wartości przedsiębiorstwa faktoranta, [G. Michalski, autorstwo 100%], RYNEK FINANSOWY. INSPIRACJE Z INTEGRACJI EUROPEJSKIEJ., P.Karpuś, J.Węcławski (red.), UMCS Lublin 2008, ISBN 978-83-227-2885-7, s. 611-616.
[13]        2008    Finansowa efektywność inwestycji w kapitał pracujący netto przedsiębiorstwa, [G. Michalski, autorstwo 100%], WARTOŚĆ JAKO KRYTERIUM EFEKTYWNOŚCI, T. Dudycz (red.), Politechnika Wrocławska, Wrocław 2008, ISBN 978-83-926902-1-4, s. 97-100.
[14]        2008    Firm value and net current assets investments, [G. Michalski, autorstwo 100%], ICBE 2008, Management & Marketing, C. Chiru i inni (red.), Constanza 2008, ISBN 978-973-692-233-6, s. 57-66.
[15]        2008    Liquidity or profitability: financial effectiveness of investments in working capital, [G. Michalski, autorstwo 100%], EUROPEAN FINANCIAL SYSTEMS, P. Cervinek (red.), Masarykova Univerzita, Brno 2008, ISBN 978-80-210-4628-3, s. 129-138.
[16]        2008    Managing operational risk In the firm: portfolio approach In trade credit decissions, [G. Michalski, autorstwo 100%], Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu nr 6 (1206) (Ekonometria 21, J. Dziechciarz (red.)), Wrocław 2008, ISSN 1899-3192, ISSN 1507-3866, s. 107-119.
[17]        2008    Operational risk in current assets investment decisions: Portfolio management approach in accounts receivable, [G. Michalski, autorstwo = 100%], Agricultural Economics , 54/2008(1), ISSN 0139 – 570X, 2008, s.12-19.
[18]        2008    Operational risk of purchasers. Portfolio management approach in accounts receivable management, [G. Michalski, autorstwo = 100%], ECONOMIC REVIEW. QUARTERLY JOURNAL OF THE UNIVERSITY OF ECONOMICS BRATISLAVA, ISSN: 0323-262X, vol. XXXVII, no. 1/2008, Bratislava 2008, s. 22-34.
[19]        2008    Risk reduction in SME financing: JEREMIE fund influence on financial situation of small and middle enterprises, [G. Michalski, autorstwo 100%], MANAGING AND MODELING OF FINANCIAL RISK, D. Dluhosova (red.), VSB – Technical University of Ostrava, Ostrava 2008, ISBN 978-80-248-1846-7, s. 138-147.
[20]        2008    The firm value creation role of risk based cash balances, [G. Michalski, autorstwo 100%], Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1195 (Ekonometria 20, J. Dziechciarz (red.)), Wrocław 2008, ISSN 0324-8445, ISSN 1507-3866, s. 175-184.
[21]        2008    Ukierunkowana na wzrost wartości przedsiębiorstwa efektywność inwestycji w operacyjne zasoby gotówki, [G. Michalski, autorstwo 100%], Ekonomia Menedżerska (Managerial Economics), 4/2008, ISSN 1898 – 1143, s. 93-113.
[22]        2008    Value-Based Inventory Management, [G. Michalski, autorstwo = 100%], Romanian Journal of Economic Forecasting  9(1)/2008, ISSN 1582-6163, Institute of Economic Forecasting, Bucharest 2008, s. 82-90.
[23]        2008    Wartość płynności przedsiębiorstwa – zarys zagadnienia, [G. Michalski, autorstwo = 100%], [w:] Problemy zarządzania we współczesnych organizacjach. Teoria i praktyka, W. Polak, T. Noch (red.), GWSA, Gdańsk 2008, ss. 85-99.  
[24]        2008    Wpływ długości cyklu operacyjnego na wzrost wartości przedsiębiorstwa,  [G. Michalski, autorstwo 100%], w: Finanse wobec sfery realnej gospodarki, K. Znaniecka, T. Zieliński (red.), Katowice 2008, ISBN 978-83-7246-593-1, t.2, s. 89-95.
[25]        2008    Wpływ funduszu JEREMIE na finansową sytuację mikro i małych przedsiębiorstw, [G. Michalski, autorstwo 100%], INSTYTUCJONALNE I RYNKOWE UWARUNKOWANIA ROZWOJU MAŁYCH I ŚREDNICH PRZEDSIĘBIORSTW W POLSCE, E.Michalski, S.Piocha (red.), PTE Koszalin 2008, ISBN 83-920684-3-2, s. 389-401.
[26]        2008    Wpływ ryzyka pogodowego na finansową efektywność przedsiębiorstwa, [J. Kupczyk = autorstwo 50%, G. Michalski = autorstwo 50%], WARTOŚĆ JAKO KRYTERIUM EFEKTYWNOŚCI, T. Dudycz (red.), Politechnika Wrocławska, Wrocław 2008, ISBN 978-83-926902-1-4, s. 101-110.
[27]        2007    Elementy teorii portfela w zarządzaniu należnościami, [G. Michalski, autorstwo = 100%], [w:] B. Bernaś, W. Pluta [red.], „Zarządzanie finansami firm – teoria i praktyka”, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1159, Wrocław 2007, PL ISSN 0324-8445, s. 273-283.
[28]        2007    Portfolio management approach in trade credit decision making, [G. Michalski, autorstwo = 100%], Romanian Journal of Economic Forecasting  3/2007, ISSN 1582-6163, Institute of Economic Forecasting, Bucharest 2007, ss. 42-53 (oraz: Portfolio management approach in trade credit decision making, INTERNATIONAL PROBLEMS (“Medunarodni problemi”), ISSN 0025-8555, Institute of International Politics and Economics, Beograd 2007, ss. 546-559; oraz: Portfolio management approach in trade credit decision making, ACTA ACADEMICA KARVINIENSIA 2/2007, ISSN 1212-415X, Slezska Univerzita v Opave, Karvina 2007, ss. 77-87).
[29]        2007    Portfolio theory approach in the value based accounts receivable management, [G. Michalski, autorstwo = 100%], w: J. Krajicek [red.], "European financial systems 2007", Masaryk University, Faculty of Economics and Administration, Department of Finance, Brno 2007, ISBN 978-80-210-4319-0, s. 255-263.
[30]        2007    Powody utrzymywania gotówki w przedsiębiorstwie i ich  relacja do ryzyka, [G. Michalski, autorstwo = 100%], w: W. Pluta [red.], „Zarządzanie Finansami Przedsiębiorstw - Teoria i  Praktyka”, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1152, Wrocław 2007, PL ISSN 0324-8445, s. 365-375.
[31]        2007    Trade credit decision making based on portfolio management approach, [G. Michalski, autorstwo = 100%], EKONOMIKA 2007 / 80, ISSN 1392-1258, Vilnius University Publishing House 2007, ss. 40-50.
[32]        2007    Value Based Trade Credit Decision Making, [G. Michalski, autorstwo = 100%], [w:] E. Urbańczyk [red.], “The problems of Company Value Management”, Uniwersytet Szczeciński, Szczecin 2007, ISBN 9788360903384, s. 173-180.
[33]        2007    Value-based Inventory Management, [G. Michalski, autorstwo = 100%], [w:] D. Dluhošová [red.], “Financial Management of Firms and Financial Institutions”, VSB, Ostrava 2007, ISBN 9788024815510, s. 163-171.
[34]        2007    VBEOQ – optymalna z punktu widzenia maksymalizacji wartości przedsiębiorstwa wielkość zamówienia zapasów, [G. Michalski, autorstwo = 100%], w: E. Urbańczyk [red.], „Strategie wzrostu wartości przedsiębiorstwa”, Wydział Nauk Ekonomicznych i Zarządzania Uniwersytetu Szczecińskiego, Szczecin 2007, ISBN 978-83-60585-04-7, s. 523-531.
[35]        2007    Wpływ decyzji w zakresie strategii zarządzania kapitałem obrotowym netto na wartość przedsiębiorstwa, [G. Michalski, autorstwo = 100%], [w:] P. Karpuś, J. Węcławski [red.], „Problemy rozwoju rynku finansowego w aspekcie wzrostu gospodarczego”, UMCS Lublin 2007, ISBN 9788322727409, s. 564 – 570.
[36]        2007    Wskaźniki poziomu płynności w małym przedsiębiorstwie, [G. Michalski, autorstwo = 100%], [w:] A. Bielawska [red.], „Uwarunkowania rynkowe rozwoju mikro i małych przedsiębiorstw”, Zeszyty Naukowe Uniwersytetu Szczecińskiego nr 458, Ekonomiczne problemy usług nr 10, Szczecin 2007, ISSN 1640-6818, s. 277-285.
[37]        2006    Czynniki kształtujące koszt kapitału obcego w małym przedsiębiorstwie, [G. Michalski, autorstwo = 100%], w: „Uwarunkowania rynkowe rozwoju mikro i małych przedsiębiorstw”, A. Bielawska [red.], Zeszyty Naukowe Uniwersytetu Szczecińskiego, nr 427, „Ekonomiczne problemy usług”, Szczecin 2006, nr 2, ISBN 978-83-7241-543-1, s. 465-471.
[38]        2006    Optymalna ze względu na wartość przedsiębiorstwa  wielkość produkcji (VBPOQ), [G. Michalski, autorstwo = 100%], [w:] P. Karpuś, „Finanse przedsiębiorstwa”, UMCS Lublin 2006, ISBN 83-227-2558-2, s. 245 - 250.
[39]        2006    Risk-Based Cash Demand in a Firm, [G. Michalski, autorstwo = 100%], [w:] D. Dluhošová [red.], “Managing and  modeling of financial risk”, Vysoká Škola Báňská - Technická Univerzita Ostrava, Ostrava 2006, ISBN 80-248-1159-6, s. 179-185.
[40]        2006    Wpływ czynników kształtujących poziom ostrożnościowych zasobów gotówki na wartość przedsiębiorstwa, [G. Michalski, autorstwo = 100%], w: „Strategie wzrostu wartości przedsiębiorstwa. Teoria i praktyka”, E. Urbańczyk [red.], ZN US nr 434, Prace Instytutu Ekonomiki i Organizacji Przedsiębiorstw nr 48, Wydział Nauk Ekonomicznych i Zarządzania, Wydawnictwo Uniwersytetu Szczecińskiego, Szczecin 2006, ISSN 1640-6818, t.1, s. 453-458.
[41]        2006    Zarządzanie finansami mikro- i małych przedsiębiorstw w warunkach ryzyka wynikającego z globalizacji, [G. Michalski, autorstwo = 100%], [w:] „Dylematy teorii i praktyki zarządzania”, M. Duczmal, T. Pokusa (red.), „Finansowo-społeczne problemy zarządzania w mikro- i makroskali”, Polska Akademia Nauk Oddział w Katowicach, Komisja Nauk Prawnych i Ekonomicznych, Wyższa Szkoła Zarządzania i Administracji w Opolu, Opole 2006, ISBN 83-88980-38-6, t.2, s. 46-64.
[42]        2005    Krótkoterminowe źródła finansowania małych i średnich przedsiębiorstw, [G. Michalski, autorstwo = 100%], w: „Przekształcenia rynku finansowego w Polsce”, opracowanie monograficzne pod red. P. Karpuś, J. Węcławski, Wydawnictwo UMCS, Lublin 2005, t. 2, s. 171-184.
[43]        2005    Metody kontrolowania prawidłowości spływu należności, [G. Michalski, autorstwo = 100%], Finanse, Bankowość, Rachunkowość nr 3, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1062, Wydawnictwo AE, Wrocław 2005, s. 33-42.
[44]        2005    Optymalny poziom płynności finansowej w MŚP, [G. Michalski, autorstwo = 100%], w: „Rozprawy i studia”, pod red. A. Bielawska, US, Szczecin 2005, t. 571, s. 185-194.
[45]        2005    Strategie zarządzania kapitałem obrotowym a wzrost wartości MŚP, [G. Michalski, autorstwo = 100%], Studia i Prace Kolegium Zarządzania i Finansów, Zeszyt Naukowy 55, SGH, Warszawa 2005, s. 90-102.
[46]        2005    Zarządzanie zapasami w małym przedsiębiorstwie, [G. Michalski, autorstwo = 100%], Finanse, Bankowość, Rachunkowość nr 2, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1059, Wydawnictwo AE, Wrocław 2005, s. 190-197.
[47]        2005    Zarządzanie zapasami z uwzględnieniem ryzyka czasu dostaw i jego wpływ na wartość przedsiębiorstwa, [G. Michalski, autorstwo = 100%], [w:] J. Dziechciarz [red.], „Zastosowania metod ilościowych”, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1096, Ekonometria nr 15, Wydawnictwo AE, Wrocław 2005, PL ISSN 0324-8445, PL ISSN 1507-3866, s. 285 – 296.
[48]        2005    Zastosowanie modeli zarządzania środkami pieniężnymi w przedsiębiorstwie, [G. Michalski, autorstwo = 100%], w: „Rynek Finansowy. Szanse i Zagrożenia Rozwoju”, T. 2: Zarządzanie finansami przedsiębiorstw i instytucji, opracowanie monograficzne pod red. P. Karpuś, J. Węcławski, Wydawnictwo UMCS, Lublin 2005, t. II, s. 39-53.
[49]        2004    Czynniki obniżające wewnętrzną wartość płynności, [G. Michalski, autorstwo = 100%], Finanse, Bankowość, Rachunkowość nr 1, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1012, Wydawnictwo AE, Wrocław 2004, s. 80-88.
[50]        2004    Definicja i znaczenie krótkoterminowej płynności finansowej, [G. Michalski, autorstwo = 100%], Zarządzanie finansami firm – Teoria i praktyka, red. W. Pluta, PN 1042, AE, Wrocław 2004, 2 tom, s. 65-72.
[51]        2004    Metody pośrednio uwzględniające ryzyko operacyjne w zarządzaniu finansami małego przedsiębiorstwa, [G. Michalski, autorstwo = 100%], Ekonometria nr 14, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1021, Wydawnictwo AE, Wrocław 2004, s. 335-350.
[52]        2004    Optymalna wielkość zamówienia zapasów a wartość przedsiębiorstwa, [G. Michalski, autorstwo = 100%], w: Zarządzanie Finansami. Finansowanie przedsiębiorstw w Unii Europejskiej, red. D. Zarzecki, US WNEiZ, Szczecin 2004, s. 291-300.
[53]        2004    Relacja C/WK jako czynnik determinujący wewnętrzną wartość płynności, [G. Michalski, autorstwo = 100%], w: „Strategie i instrumenty alokacji kapitału finansowego”, opracowanie monograficzne pod red. P. Karpuś, J. Węcławski, Wydawnictwo UMCS, Lublin 2004, s. 409-419.
[54]        2003    Bieżące zarządzanie finansami oparte na informacji o wartości płynności i jego wpływ na wartość przedsiębiorstwa, [G. Michalski, autorstwo = 100%], Zarządzanie nr 1, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 998, Wydawnictwo AE, Wrocław 2003, s. 75-84.
[55]        2003    Dynamiczny pomiar płynności, [G. Michalski, autorstwo = 100%], Ekonometria nr 12, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 1002, Wydawnictwo AE, Wrocław 2003, s. 185-199.
[56]        2003    Informacyjna przydatność statycznych miar poziomu płynności finansowej, [G. Michalski, autorstwo = 100%], Ekonometria nr 11, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 981, Wydawnictwo AE, Wrocław 2003, s. 214-226.
[57]        2003    Korzyści firmy z utrzymywania płynności finansowej, [G. Michalski, autorstwo = 100%], Finanse i Bankowość nr 11, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 972, Wydawnictwo AE, Wrocław 2003, s. 115-124.
[58]        2003    Optymalny poziom płynności finansowej – propozycja wyznaczania, [G. Michalski, autorstwo = 100%], Finanse i Bankowość nr 10, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 970, Wydawnictwo AE, Wrocław 2003, s. 30-39.
[59]        2003    Powody utrzymywania płynności w przedsiębiorstwie produkcyjnym, [G. Michalski, autorstwo = 100%], w: „Zarządzanie Finansami. Mierzenie wyników i wycena przedsiębiorstw”, D. Zarzecki (red.), Uniwersytet Szczeciński, Wydział Nauk Ekonomicznych i Zarządzania, Szczecin 2003, ISBN 83-89142-11-2, t.II, s 91-99.
[60]        2003    Zarządzanie należnościami w małych i średnich przedsiębiorstwach z punktu widzenia wartości płynności finansowej, [G. Michalski, autorstwo = 100%], w: „Finansowe aspekty funkcjonowania małych i średnich przedsiębiorstw”, E. Orechwa-Maliszewska, A. Kopczyk (red.), Wydawnictwo Wyższej Szkoły Finansów i Zarządzania, Białystok 2003, ISBN 83-87256-56-0, s. 357-369.

Monografie:

[61]        2009    Strategie finansowe przedsiębiorstw. Budżetowanie kapitałów i ocena finansowej opłacalności i ryzyka strategicznych decyzji przedsiębiorstw, [G. Michalski, autorstwo = 100%],  ODDK, Gdańsk 2009, ISBN 83-74265-67-6.
[62]        2008    Ocena finansowa kontrahenta na podstawie sprawozdań finansowych, [G. Michalski, autorstwo = 100%],  ODDK, Gdańsk 2008, ISBN 83-74265-09-6.
[63]        2004    Wartość płynności w bieżącym zarządzaniu finansami, [G. Michalski, autorstwo = 100%], CeDeWu, Warszawa 2004.
[64]        2004    Finansowe strategie przedsiębiorstwa. Podstawy teorii i przykłady, [G. Michalski, autorstwo = 100%], Monografie i Opracowania Wyższej Szkoły Zarządzania i Administracji w Opolu, Wydawnictwo WSZiA, Opole 2004.
[65]        2003    Podstawy zarządzania finansami przedsiębiorstwa, [G. Michalski, autorstwo = 100%], Monografie WSZ Edukacja, Wrocław [Wydanie 1 w r. 2003; wydanie 2 w r. 2004].


Podręczniki akademickie, poradniki i leksykony:

[66]        2007    Tajniki finansowego sukcesu dla mikrofirm. Od uruchomienia do stabilnego wzrostu, K. Prędkiewicz, G. Michalski [G. Michalski, autorstwo = 50%], CHBeck, Warszawa, 2007 [książka nominowana do nagrody „Złote Skrzydła 2007” Gazety Prawnej, w zakresie „Zarządzania”].
[67]        2005    Płynność finansowa w małych i średnich przedsiębiorstwach, [G. Michalski, autorstwo = 100%], WN PWN, Warszawa 2005.
[68]        2005    W. Pluta, G. Michalski, Krótkoterminowe zarządzanie kapitałem. Jak utrzymać płynność?, [G. Michalski, autorstwo = 80%, W. Pluta, autorstwo = 20%], CHBeck, Warszawa 2005.
[69]        2004    Analiza i ocena sytuacji finansowej MŚP, [G. Michalski, autorstwo rozdziału 3], w: Finanse małych i średnich przedsiębiorstw, red. W. Pluta, PWE Warszawa 2004, s. 100-130; Załącznik 2, [G. Michalski, autorstwo załącznika 2], w: Finanse małych i średnich przedsiębiorstw, red. W. Pluta, PWE Warszawa 2004, s. 347-356; Załącznik 3, [G. Michalski, autorstwo załącznika 3], w: Finanse małych i średnich przedsiębiorstw, red. W. Pluta, PWE Warszawa 2004, s. 357-366.
[70]        2004    Leksykon zarządzania finansami, [G. Michalski, autorstwo = 100%], CH Beck, Warszawa 2004.


Recenzje, raporty, skrypty i inne publikacje:

[71]        2009    Recenzja artykułu: b.t., dla Journal of Multinational Financial Management ISSN: 1042-444X (Elsevier).
[72]        2009    Recenzja artykułu: Application of Benford's Law in Payment Systems Auditing, Journal of Information and Organizational Sciences, ISSN: 1846-9418, s.
[73]        2008    Kapitał intelektualny a efektywność małej i średniej przedsiębiorczości [G. Michalski, autorstwo = 100%], w: Kompleksowe badanie zapotrzebowania rynku pracy kadr kwalifikowanych województwa opolskiego w celu dostosowania oferty edukacyjnej i szkoleniowej do jego potrzeb (raport końcowy), M. Duczmal, D. Potwora, W. Potwora (red.), WSZiA w Opolu, Opole 2008, ISBN 978-83-88980-65-7, s. 98-107.
[74]        2008    Raport na zamówienie Urzędu Marszałkowskiego Województwa Dolnośląskiego: Opinia na temat wpływu inicjatywy JEREMIE na finansową sytuację MŚP w regionie Dolnośląskim, wynikającego z raportu JEREMIE nt.: dostępu do finansowania MŚP w regionie Dolnośląskim, wraz z rekomendacjami dotyczącymi udziału w inicjatywie JEREMIE, Wrocław 2008 (materiał niepublikowany).
[75]        2008    Recenzja artykułu:  The effectiveness of national R&D investment - an empirical investigation in China, autorstwa: Ping Shi, Jiaqin Yang, Problems and Perspectives in Management, International Research Journal, vol. 6, iss. 4, 2008, s. 4-11, (Recenzja publikacji dla czasopisma: Problems and Perspectives in Management, w ramach zadań powierzonych mi jako członkowi komitetu redakcyjnego tego czasopisma).
[76]        2008    Recenzja artykułu: From investment rules of thumb to routines: a real option approach, Thierry Burger-Helmchen, Problems and Perspectives in Management, International Research Journal, vol. 6, iss. 1, 2008, s. 64-73, (Recenzja publikacji dla czasopisma: Problems and Perspectives in Management, w ramach zadań powierzonych mi jako członkowi komitetu redakcyjnego tego czasopisma).
[77]        2007    Kiedy wejście na giełdę ma sens? [G. Michalski, autorstwo = 100%], Gazeta Finansowa, Styczeń 2007.
[78]        2005    Polityka kredytu kupieckiego, [W. Pluta autorstwo = 80%, G. Michalski, autorstwo = 20%], Monitor Rachunkowości i Finansów, nr 6/2005, ISSN 1506-932X, s. 49-54.
[79]        2005 - 09    Kilkadziesiąt skryptów szkoleniowych z zakresu zarządzania finansami, oceny kontrahenta na podstawie sprawozdań finansowych, oceny efektywności projektów inwestycyjnych, zarządzania płynnością itp.
[80]        2008    Recenzja artykułu: Theory of Microcrediting in Transitional Economies, Nikola Kadoić, Matija Kopić, Journal of Information and Organizational Sciences, ISSN: 1846-9418, s.


* * *
Publikacje wydane i przygotowane przed obroną pracy doktorskiej:
[81]        Możliwości wpływania samorządu lokalnego na rozwój gospodarczy regionu, [G. Michalski, autorstwo = 100%], w: „Zarządzanie finansami w transformacji przedsiębiorstw”, red. T. Jajuga, T. Słoński, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 837, Wydawnictwo AE Wrocław 1999, s. 248-253.
[82]        Budżetowanie kapitałów, praca zbiorowa pod red. Wiesława Pluty, PWE Warszawa 2000, współautor [podrozdziały: 1.3, 1.5, 1.6;] s. 25-45, 59-86.
[83]        Wybrane zagadnienia zarządzania kapitałem obrotowym w gminie, [G. Michalski, autorstwo = 100%], w: „Zarządzanie finansami, współczesne tendencje w teorii i praktyce”, WN US, Szczecin 2000, t. 1, s. 419-430.
[84]        Finansowanie zewnętrzne a wartość płynności – wybrane zagadnienia, [G. Michalski, autorstwo = 100%], w: „Finansowe wspomaganie rozwoju przedsiębiorstw”, red. P. Karpuś, J. Węcławski, Wydawnictwo UMCS, Lublin 2000, s. 315-326.
[85]        W poszukiwaniu wartości płynności przedsiębiorstwa – wybrane zagadnienia, [G. Michalski, autorstwo = 100%], Finanse i Bankowość nr 8, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 904, Wydawnictwo AE, Wrocław 2001, s. 106-118.
[86]        Model opcyjnej wartości płynności – wybrane zagadnienia, [G. Michalski, autorstwo = 100%], Ekonometria nr 8, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 915, Wydawnictwo AE, Wrocław 2001, s. 197-213.
[87]        Pomiar poziomu płynności finansowej w przedsiębiorstwie – wybrane zagadnienia, [G. Michalski, autorstwo = 100%], w: Zarządzanie finansami firm – teoria i praktyka, red. W. Pluta, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 894, Wydawnictwo AE, Wrocław 2001, 119-134.
[88]        Opcyjna wartość płynności finansowej przedsiębiorstwa – zarys problemu, [G. Michalski, autorstwo = 100%], w: Inwestycje finansowe i ubezpieczenia – tendencje światowe a polski rynek, red. K. Jajuga, W. Ronka – Chmielowiec, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 890, Wydawnictwo AE, Wrocław 2001, t. 2, s. 239-250.
[89]        Czynniki determinujące wewnętrzną wartość płynności, [G. Michalski, autorstwo = 100%], w: Rozwój rynku finansowego w Polsce, red. P. Karpuś, J. Węcławski, Wydawnictwo UMCS, Lublin 2001, s. 307-314.
[90]        Kapitał obrotowy netto jako czynnik determinujący wewnętrzną wartość płynności finansowej, [G. Michalski, autorstwo = 100%], Finanse i Bankowość nr 9, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 906, Wydawnictwo AE, Wrocław 2002, s. 67-84.
[91]        Wpływ opóźnień w spłacie należności na budowę modelu wewnętrznej wartości płynności, [G. Michalski, autorstwo = 100%], Ekonometria nr 9, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 935, Wydawnictwo AE, Wrocław 2002, s. 164-174.
[92]         Wartość płynności w zarządzaniu należnościami, [G. Michalski, autorstwo = 100%], Zarządzanie i Marketing nr 22, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 957, Wydawnictwo AE, Wrocław 2002, s. 144-159.
[93]        Zarządzanie środkami pieniężnymi w oparciu o informację o wartości płynności, [G. Michalski, autorstwo = 100%], w: „Zarządzanie finansami, klasyczne zasady – nowoczesne narzędzia”, red. D. Zarzecki, US, WNEiZ, Szczecin 2002, t. 1, ss. 387-398.
[94]        Możliwości finansowe i inwestycyjne związane z istnieniem rynku pieniężnego, [G. Michalski, autorstwo = 100%], w: Zarządzanie finansami firm – teoria i praktyka, red. W. Pluta, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 965, Wydawnictwo AE, Wrocław 2002, s. 136-151.
[95]        Zastosowanie teorii użyteczności do wyznaczania optymalnego poziomu płynności finansowej w przedsiębiorstwie, [G. Michalski, autorstwo = 100%], Ekonometria nr 10, Prace Naukowe Akademii Ekonomicznej we Wrocławiu nr 950, Wydawnictwo AE, Wrocław 2002, s. 182-196.

Wrocław 2009-04-11

Grzegorz Michalski
 

michalskig
 
michalskig: DECREASING DELIVERY RISK OF PURCHASERS: INVENTORY MANAGEMENT OPTIMIZATION AS PART OF OPERAIONAL RISK MANAGEMENT

Grzegorz Michalski
Wroclaw University of Economics,
Department of Corporate Finance and Value Management,
ul. Komandorska 118/120, p. Z-2, KFPiZW;
PL53345 Wroclaw, Poland;
Phone: +48503452860;
Fax: +48713680646,
michalskig@ue.wroc.pl;
michalskig.ue.wroc.pl/



Abstract: The basic financial purpose of an enterprise is maximization of its value. Inventory management should also contribute to realization of this fundamental aim. The enterprise value maximization strategy is executed with a focus on risk and uncertainty. This article presents the consequences for the recipients firm that can result from operating risk that is related to delivery risk generated by the suppliers. The present article offers a method that uses portfolio management theory to chose the suppliers.

Keywords: Corporate liquidity, firm value, delivery risk

JEL Classifications: G39, G32, G11, M11, D81

1. Introduction

Current assets i.e. the sum of inventories, accounts receivable, short-term investment (cash and equivalents) and short term accruals [Mueller 1953; Graber 1948; Khoury 1999; Cote 1999] are for the firm collateral/protection against risk [Merton 1999, p. 506; Lofthouse 2005; p. 27-28; Parrino 2008, p. 224-233, Poteshman 2005, p. 21-60] and at the same time a investment [Levy 1999, p. 6; Reilly 1992, p. 6; Fabozzi 1999, p. 214]. Current assets level is a result of kind of production organisation [Baumol 1952, Beck 2005, Beranek 1963, Emery 1988, Gallinger 1986, Holmstrom 2001, Kim 1998, Kim 1978, Lyn 1996, Tobin 1958, Stone 1972, Miller 1966, Miller 1996, Myers 1998, Opler 1999]. As a result of it, the firm maintain adequate level of inventories and it is linked rather with operational management than with financial decisions  [Peterson 1979, p. 67-69; Orlicky 1975, p.17-19; Plossl 1985, p. 421-424]. At the same time current assets are the result of active policy of gaining and holding the firm clients. [Bougheas 2009]. The firm offer should be suited to demand and character of the firm clients. The inventory levels are also a result of this policy.
The basic financial purpose of an enterprise is maximization of its value. Inventory management should also contribute to realization of this fundamental aim. Many of the current asset management models that are found in financial management literature assume book profit maximization as the basic financial purpose. These book profit-based models could be lacking in what relates to another aim (i.e., maximization of enterprise value). The enterprise value maximization strategy is executed with a focus on risk and uncertainty. This article presents the consequences for the recipients firm that can result from operating risk that is related to delivery risk generated by the suppliers. The present article offers a method that uses portfolio management theory to chose the suppliers.
When entrepreneur chooses the tradesman, should concentrate his attention, not only at basic knowledge about the contracting party individual shape parameters (i.e. the tradesman financial situation), but also on information from inventory management models.
The Economic Order Quantity model of inventory management is used to mark the optimum size of delivery and to choose the cheapest deliverer. Both of these choices should guarantee minimization of total costs of investments in inventories.


Fig 1. Economic Order Quantity model.
where: LIL - Low Inventory Level (Precautionary Inventory Level); AIL – Average Inventory Level; HIL – High Inventory Level; Q – Order Quantity (Q = HIL – LIL).  

On fig 1. is shown the way the EOQ (and VBEOQ) model works. Q could be calculated as:
,
(1)
where:    EOQ – target (optimal) order quantity (economic order quantity),  P – yearly demand for optimized inventories, Kz – creating inventories costs (fixed cost of one order), Ku – operating costs of maintaining inventories (without costs of maintaining safety/precautionary inventories LIL), Ca – percentage rate of operating costs of maintaining inventories (with financial/alternative costs of capital and without costs of maintaining safety/precautionary inventories LIL), v – unit price (cost) of ordered inventories.

The percentage share of retaining the reserves comes from the fact that the costs of retaining the reserves increase proportionally to the level of reserves In the enterprise. Its share is a sum of the following costs: alternative (resulting from the possibility of their potential use somewhere else but without cost of capital financing firm), storage, logistics and internal transport within the factory of the reserves, insurance, decay.

,
(2)
where: TCI – total reserves costs, Q – magnitude of the part of delivery, zb – the level of safety margin.
From the point of view of maximizing the enterprise value a part of delivery can be determined based on the formula for VBEOQ:

(3)
where:    k – alternative cost (equal to the enterprise financing capital), VBEOQ – optimal magnitude of single order from the point of view of maximizing the enterprise value, C – percentage rate of operating costs of maintaining inventories (without financial/alternative costs of capital and without costs of maintaining safety/precautionary inventories LIL).

,
(4)
And:

(5)
where: K#z – tax-deductible creating inventories costs (fixed cost of one order), K*z – non- tax-deductible creating inventories costs (fixed cost of one order), C# – percentage rate of tax-deductible operating costs of maintaining inventories (without financial/alternative costs of capital and without costs of maintaining safety/precautionary inventories LIL), C* – percentage rate of non-tax-deductible operating costs of maintaining inventories (without financial/alternative costs of capital and without costs of maintaining safety/precautionary inventories LIL).    
And:

(6)

The problem, we are going to deal with in this paper is to select a counterpart amongst the suppliers in a situation where the parameters we know carry the risk resulting from deliveries out of schedule.

Example 1. Enterprise X producing special fireproof curtains uses raw material D-18. The annual demand for this raw material is  8000 m3. There are two suppliers (A and B) on the market offering similar delivery terms. The price of the material for both of them is 3000$ for m3, the lead-time is 20 days, the cost of inventory retaining is 38%, the cost of enterprise financing capital  is 30%, effective tax rate is 19%, the costs of ordering is 200$ and the cost of  lack of reserves is 5000 000$. The analysis of recommendation given by the companies showed that both suppliers were not equally reliable. Supplier A was nearly perfect, supplier B often did not deliver on time, he happened to show up 4 days before the agreed date , but equally often used to come 8 days later.
Based on the gathered data it was estimated the standard deviation of the delivery time in case of supplier A was 4 days, and for supplier B 6 days. In order to evaluate who is more reliable it is necessary to determine the safety margin for supplier A and then for supplier B. The next step is to check the impact of suppliers risk on the enterprise value. We assume that the enterprise in order to estimate the optimal order magnitude uses the VBEOQ. model
m3
Differences in reliability of deliveries have a great impact on different levels of safety margins required for suppliers A and B. For this purpose the following formula is used [Piotrowska 1997,  57]:

(7)
where:    s – standard deviation for reserves usage, Kbz – cost of lack of inventory reserves.

In order to use the formula it is necessary to exchange the deviation of delivery time to deviation of raw material use. It is known average daily use is 8000/360 = 22,2 m3. Therefore 4 days deviation for delivery date is equal to deviation of use equal to  88,8 m3. Therefore, for such a situation the safety margin will be equal to :
m3.
In this case the level of  resources tied in the reserves is:
$,
Next case reflects a situation in which the entrepreneur uses the services from company B. So the standard deviation will be 6×(8000/360) = 133,3 m3.
Therefore reserves safety margin will be:
m3.
In this case the level of  resources tied in the reserves is:
$,
Comparing this magnitude to the level of reserves in situation where one would have used supplier A it is obvious that the increase of money resources tied in the reserves will be:
$.
The last stage is to compare what impact the risk generated by the counterparts – suppliers has on the value of the enterprise. Therefore we estimate the level of total costs of reserves:
$,
$,
$.
Obtained results will be used for estimation of fluctuations in the enterprise value:
$.
It is apparent that it is better to select counterpart – supplier A because selection of supplier B may result in destruction of enterprise value.

2. Suppliers` portfolio

Usually the enterprise’s suppliers have materials and stock from the same source. It happens though, that their sources of supply are different and therefore the risk of deliveries related to individual suppliers is different. f such a thing occurs, it may be possible to use elements taken from the portfolio theory for supplier’s evaluation. Sometimes the counterparts , who although may be have virtues who exclude them from being suppliers of services in the beginning (like supplier B in example B), it may be possible that having considered the risk of the buyer it may turn out that on the contrary they decrease or stabilize the risk level.

Portfolio is a set of assets (for example in a non accountant sense : suppliers). The theory of portfolio management is based on the rate of advantages drawn from buying from particular supplier, informing about the relation of advantage generated by such a purchase to the outlay related to such a purchase.
The measure allowing the measurement of risk connected to costs from particular buyer may be defined as this variation:
     (8)
where: pi – probability of occurrence of the given situation estimated from historical data.
In connection to the information about what potential advantages might be brought by giving a loan to a particular buyer, it is possible to estimate the variation coefficient: :
   (9)
The next element is a correlation of benefits from purchase from particular supplier with benefits from this purchase from other suppliers. The correlation coefficient is usually the measure of such a correlation:
   (10)
where:   - correlation coefficient of benefits from purchase from the first and second supplier; R1 – expected rate of benefits from purchasing from first supplier; R2 – o expected rate of benefits from purchasing from the second supplier; s1 – standard deviation for the first supplier s2 – standard deviation for the second supplier; R1i – possible rates of benefits from the purchases from the first supplier; R2i – possible rates of benefits from the purchases from the second supplier; pi – probability of occurrence of possible rates of benefits from supplies.

3. Portfolio of two suppliers (groups of suppliers).

Example 2. The enterprise uses two suppliers. On of them operates in sector A, the other represents sector B. The use of portfolio idea is useful when the correlation between the benefits from purchases from these suppliers is negative. We can follow this in the picture below.

Fig. 2. Relation between benefit and risk for portfolio of two suppliers at different correlation coefficients (equal to 1, (-1) or 0).

Case 1. The correlation coefficient between benefits from purchases from supplier A and B equals to 1. The picture shows that at positive correlation  near to 1 there is no possibility to seek advantages resulting from diversification.
Case 2. Correlation coefficient equal to –1. Ideal negative correlation. All possible portfolios  at correlation coefficient equal to –1 are contained on the broken line A-A/B1-A/B2-B. Points “A” and “B” represent single-components portfolios (eg. Using only supplier A). As we see, when we move away from point “A” and increase the share of deliveries performed by “B” the risk S decreases and benefits R increases. This happens until point A/B1 . If this share is exceeded the risk of portfolio will increase together with the increase of income. As we see it is no substantiated to have only supplier A in the portfolio because at identical risk portfolio A/B2 offers greater benefits.  
Case 3. Correlation coefficient equals 0. It is a situation in which the benefits from supplier A and supplier B are not connected to each other. In this situation only partial risk reduction is possible. Reasonable entrepreneur should not select any of the portfolios of dues lying on A-A/B3 arc, because it always possible to find more advantageous complement on  A/B3 – A/B4 arc which at the same risk s yields higher benefits R.

4. Using the elements of portfolio theory for selection of suppliers  

Skilful construction of portfolio of two (groups) of suppliers may lead to a considerable reduction of risk. Inclusion of second component into single-component portfolio (which like in example 1 so far consisted of only one better supplier A and accepting deliveries from less risky supplier) nearly always leads to reduction of risk, sometimes even at simultaneous increase of benefit rate of portfolio.
Example 3. (continuation of the previous example) After assessment of supplier A and B , the entrepreneur noticed that the delays connected to services provided by suppliers A and B are negatively correlated with each other, because their sources of supply are different when troubles with deliveries from first source can be expected, the other source does not pose a risk of such difficulties.  Thanks to that we can expect a decrease of risk of non forward deliveries . Both suppliers acquire the material D-18 based on different technologies. Therefore one can expect that the impact of deliveries risk on the receiver can be decreased due suing the service of both suppliers, because the correlation of distribution of forward deliveries of suppliers A and B is negative and is equal to –0.56. The orders will be placed in quantities and frequency resulting from VBEOQ model. The orders will be realized by both suppliers: A and B equal shares of 18,85 m3. . In order to estimate new level of safety margin it is necessary to use the equation determining the total standard deviation:

(11)
where:    sT – total standard deviation, sA – standard deviation of the first distribution, sB – standard deviation of the second distribution,   – correlation coefficient between the first and second distribution.

Assuming that one-day deviation is equal to deviation of use equal to 11,1 m3; the safety margin is::

m3.
In this case the level of money resources tied in the reserves will be:
$,
comparing this magnitude to the level of reserves in a situation where we would have used supplier A only it is obvious that the increase of money tied in the reserves will be equal to:
$.
The last stage is to compare what impact the risk generated by the counterparts-suppliers has on the enterprise value. Therefore we estimate the total level of costs of reserves:
$,
$.
Obtained results are used for estimation of changes of the enterprise value.
$.
As we see in particular conditions it is possible to get benefits from using both suppliers (better A and worse B). Such a choice may result in increase of enterprise value.

BIBLIOGRAPHY

Baumol W.J., The Transactions Demand for Cash: An Inventory Theoretic Approach, Quarterly Journal of Economics”, nr 66, Nov 1952, p. 545-556.
Beck S.E., D.R. Stockman, Money as Real Options in a Cash-in-Advance Economy,  Economics Letters, 2005, vol. 87, p. 337-345.
Beranek W., Analysis for Financial Decisions, R. D. IRWIN, Homewood 1963.
Bougheas S., Mateut S., Mizen, P., Corporate trade credit and inventories: New evidence of a trade-off from accounts payable and receivable, Journal of Banking & Finance, vol. 33, no. 2, 2009, p. 300-307.
Cote J.M., C.K. Latham, The Merchandising Ratio: A Comprehensive Measure of Working Capital Strategy, Issues in Accounting Education, vol. 14, no. 2, May 1999, p. 255-267.
Emery G.W., Positive Theories of Trade Credit, Advances in Working Capital Management, JAI Press, vol. 1, 1988, p. 115-130.
Fabozzi F.J., Investment Management, Prentice Hall, Upper Saddle River 1999.
Gallinger G., A. J. Ifflander, Monitoring Accounts Receivable Using Variance Analysis Financial Management, zima 1986, 69-76.
Graber P.J., Assets, The Accounting Review, vol. 23, no. 1, Jan. 1948, p. 12-16.
Holmstrom B., J. Tirole, LAPM: a liquidity-based asset pricing model, Journal of Finance, 2001, vol. 56, p. 1837-1867 {WP6673, National Bureau of Economic Research, Cambridge, 1998}.
Kalberg J. G., K. L. Parkinson, Corporate liquidity: Management and Measurment, IRWIN, Homewood 1993.
Khoury N.T., K.V. Smith, P.I. MacKay, Comparing Working Capital Practices in Canada, the United States and Australia, Revue Canadienne des Sciences de l’Administration, vol. 16, no. 1, Mar. 1999, p. 53-57.
Kim C-S., D. C. Mauer, A. E. Sherman, The Determinants of Corporate Liquidity: Theory and Evidence, Journal of Financial and Quantitative Analysis, vol. 33, nr 3, 1998.
Kim Y. H., J. C. Atkins, Evaluating Investments in Accounts Receivable: A Wealth Maximizing Framework, Journal of Finance, vol. 33, nr 2, 1978, p. 403-412.
Levy H., D. Gunthorpe, Introduction do Investments, South-Western College Publishing, Cincinnati 1999.
Lofthouse S., Investment Management, Wiley, Chichester 2005.
Lyn E. O., G. J. Papaioannou, Liquidity and the Financing Policy of the Firm: an Empirical Test, Advances in Capital Management, Londyn 1996, vol. 3, p. 65-83.
Merton R.C, A.F. Perold, Theory of Risk Capital in Financial Firms, w: D.H. Chew, The New Corporate Finance. Where Theory Meets Practice, McGraw-Hill, Boston 1999.  
Miller M.H., D. Orr, A Model of the Demand for Money by Firms, Quarterly Journal of Economics, 1966, nr 80, p. 413-435.
Miller T. W., B. K. Stone, The Value of Short-Term Cash Flow Forecasting Systems, Advances in Working Capital Management, JAI Press Inc., Londyn 1996,  vol. 3, p. 3-63.
Mueller F.W., Corporate Working Capital and Liquidity, The Journal of Business of the University of Chicago, vol. 26, no. 3, Jul. 1953, p. 157-172.
Myers S. C., R. G. Rajan, The Paradox of Liquidity, Quarterly Journal of Economics 113, nr 3, Cambridge, 1998, p. 733-771.
Opler T., R. Stulz, R. Williamson, The determinants and implications of corporate cash holdings, Journal of Financial Economics, vol. 52, no. 1, 1999, p. 3-46.
Orlicky J., Material Requirements Planning, McGraw-Hill, New York 1975.
Parrino R., D.S. Kidwell, Fundamentals of Corporate Finance, Wiley, New York 2008.
Peterson R., E.A. Silver, Decision Systems for Inventory Management and Production Planning, Wiley, New York 1979.
Piotrowska M., Short-term financial decisions, WUE, Wroclaw 1997.
Plossl G.W., Production and Inventory Control, Principles and Techniques, Prentice Hall, Englewood Cliffs 1985.
Poteshman A., R. Parrino, M. Weisbach, Measuring Investment Distortions when Risk-Averse Managers Decide Whether to Undertake Risky Project, Financial Management, vol. 34, Spring 2005, p. 21-60.
Reilly F.K., Investments, The Dryden Press, Fort Worth 1992.
Stone B. K., The Use of Forecasts and Smoothing in Control - Limit Models for Cash Management, Financial Management, 1972, p. 72-84.
Tobin J., Liquidity Preference as Behavior Toward Risk, Review of Economic Studies, 1958 r. nr 25, p. 65-86.
 

michalskig
 
michalskig: Grzegorz Michalski


INFLUENCE OF THE ACCOUNTS RECEIVABLE FACTORING ON THE FIRM VALUE

1. INTRODUCTION

Managing the operating cycle of the enterprise requires providing with the appropriate level of cash as well as other current assets: accounts receivable and supplies. Keeping current assets generate costs, and so it influences the profitability of the company. Factoring is one of tools allowing to shorten the operating cycle which relies on the fact that the factor is purchasing present and future accounts receivable (amounts due of the enterprise), on one's own suffering the risk of the overdue regulation liabilities. Enterprise after presenting a duplicate invoice to the factor, receives the majority of money from him (up to the 80% of the amount), and the rest part in the moment of regulating the liability by the customer. Factor in exchange for the commission takes over all duties of the enterprise resulting from the sale on the principle of trade credit . There is many varieties of the factoring enterprise, most beneficial of a point of view of the functionality of the enterprise exist, there is a full-service factoring which is embracing with one's scope three functions:
(a) financial (the immediate payment for financial documents received from the enterprise using the factoring and later cribbing purchased amounts due from the debtor),


Fig. 1. Influence of the factoring on the operating cycle (CO)
Source: own study

(b) lowering the risk (guarantee, consisting in moving on of factor of the risk of trade credit resulting from the impossibility of cribbing the liability from the customer using the purchase on the principle),

Factoring is sometimes misused synonymously with financing of accounts receivable process. In this paper factoring is a transaction in which a firm of factor client sells its accounts receivable at a discount. Factoring is not a kind of bank loan, in fact it depends on the value of the accounts receivables and by it depends on the factor client clients not the firm of factor client itself.
In factoring process we have three parties involved: the factor client (the seller of the goods or work performed), credit purchaser of the goods (the debtor), and the factor. The factor client is owed money by the purchaser of the goods sold. The factor then sells its invoices at a discount to the factor to obtain cash faster. Next the client of the factor client directly pays the factor the full value of the invoice. As we see on fig. 2, in factoring process, relation between factor and its client (the firm which sells on trade credit and uses factoring to free cash tied in its accounts receivables) is a kind of swap.

Fig. 2. The factoring as the SWAP. Exchange of assets about unsure of the size to the influences devoid of the uncertainty.
Source: own study.

(c) services (the factor leads to the thing and on behalf of accounting for the customer accountants connected with the accounts receivable management). Many other varieties are also factoring, omitting some elements of the full factoring are numerous. Using these services causes, that more effectively it is possible to manage reserves of the liquidity, because influences of amounts due are far more predictable and manageable.

2. RELATION OF THE LENGTH OF THE OPERATING CYCLE TO THE FIRM VALUE
The effectiveness of operating cycle management decisions and the level of assets can be measured in a few ways. One of them is focusing on the influence on the net profit and its relation to the shareholders' equity, total assets or other item of assets. Second,  assess profitability in a way that it relates to the value of the company. If given commitment of means to liquid assets, will help to increase the value of the enterprise, it will be profitable, but if it influences lowering, will be spelling unprofitable investment (in liquid balances).

Fig. 3. Influence of account receivable policy on the value of the company
Where: CF – free cash flows, ∆NWC – increase in the net working capital, k – cost of capital financing the enterprise; t – period in which generated free financial flows will be.
Source: own study

As shown in fig. 3, individual elements influencing decisions in scope of the length of the operating cycle, influence the level of free cash flows (CF), and thus the value of the firm.

3. INFLUENCE OF THE FACTORING ON THE VALUE OF THE COMPANY
From a point of view of managing the operating cycle of the enterprise, should be considered making use of factor services, or insuring the liability too as the most desired in every production company, whose sales sizes to allow credit.
The entrepreneur has an opportunity to feed with financial means of the enterprise resulting from using of factoring services. Factoring relies on it, that enterprise, causing the sale on principles of trade credit, is not expected to rafting amounts due for sold products and/or services, but receives due financial means resulting from the sale from a subsidizing financial institution services of factoring. After the time of the maturity have passed, a financial institution is regaining means handed over to the enterprise, by collecting the amount due from recipients. A commission is remunerating for the institution serving for the factoring. The enterprise, carrying the sale out on principles of trade credit which  uses services of the factoring, called the supplier. The supplier should decide to use from services of the factoring, only if the use of this service influences an increase the firm value. The providing services of the factoring, named institution is a factor. Fig. 4. a scheme is describing action of the factoring in the case of applying the promotion method.



Fig. 4. Mechanism of the factoring – traditional method.
Labels: [1a] - the firm is carrying the sale out on trade credit principles handing down to the recipient products or services, [1b] - the information about the transaction is being passed on to the factor, [2] - the factor is handing the equivalent over to the supplier near to 80%-90% of the amount due directly after the transaction, and rest (reduced for the commission) in the more late time, [3] - the recipient is transferring the amount due for purchased products or services to the account of the factor.
Source: A. Skowronek-Mielczarek, Sources of financing the SME (in Polish: Małe i średnie przedsiębiorstwa: źródła finansowania), C.H. Beck, Warsaw 2003, s. 98

A key function of the factoring, is the securing financial means for the enterprise carrying the sale out is on principles of trade credit. Practicing the factoring has this virtue, that even if enterprise carrying the sale of its products out, isn't qualifying to receiving of bank loan, because of too low of the own credit credibility and/or the lack of credit rating, it is often possible applying the factoring and lending money up to the pledge of the amount due or the sale amounts due. Factor is, in the first row, isn't judging the enterprise carrying the sale out, but institutions which from it they are purchasing and it is a quality of their amount due is a base for establishing the cooperation on principles of the factoring.
Two essential methods of the transfer of financial means exist between the factor and the supplier . The first method relies on it, that directly after presenting a documenting duplicate invoice causing the sale on principles of trade credit, the supplier is receiving a down payment from the factor in the height about 80%-90% of the invoice value. The second method, works in the way in which the factor is purchasing amounts due and immediately pay the whole of the amount due reduced for the discount resulting from the fact amounts due will be received by it later and reduced for the commission for services provided for the supplier.
The main idea of factoring at first assumed realizing the financial function. At present however, they require in order to object of the factoring apart from the assignment supplemented was also as least with two different additional services because otherwise, in the case of very financial function, a duty of making stamp duties is arising because such a factoring is treated as the transfer amounts due, in spite of, that assignment made without the factoring, differs from the factoring in it, that at the transfer, cessionary (e.g. bank which by the enterprise amounts due stayed for ceded)  is an owner of the amount due, but of them taking down is responsibility of a transferor (of enterprise which made the transfer), while in the case of the factoring, most often with the owner of the amount due and the subject responsible for attracting them, is a factor.
In addition to major benefits, such as reducing investing funds in the net working capital and reduction of costs of collecting receivables, using the factoring is connected with such burdens as :
•    interests, in the case of providing credit, similar with height up to a bank loan,
•    the front-end fees dependent on the limit of factoring,
•    commission for assuming the risk of the bankruptcy of recipients depends on the level of the assessed risk,
•    administrative commissions depend on the amounts of the liability, for providing additional services in the scope of the bookkeeping, the debt collection, the term credit rating of debtors, of monitoring debtors of the enterprise and the consultancy.

Moreover, for the firms weakening contacts with customers can have grave consequences. Most often, the direct acquaintance of customers with his owner is playing a significant role. Takeover through of factor of many functions bound with the accounts receivable management and the sale on trade credit terms, is weakening this bond. Moreover a threat resulting from the problem of the agency and the asymmetry is arising of information.
In cases, when all contacts with recipients, will be taken over through of factor (which will be making selection of recipients being able to use from trade credit), straight out lowering the sales revenue is possible, enterprises resulting from the too rigorous assessment of customers and of the lack of fitting the offer to needs of recipients which would have the greater chance of identifying in the case of traditional forms of the contact.

Example 1. The enterprise had amounts due in previous years from recipients which made purchases before the season, on level 70000€. Recipients usually received postponing the payment lengths of 45 days from the moment of the purchase. The firm took advantage of services of the factor, arranging to meet with him, that in the moment of causing the sale, a 95% will receive sale values from it (that is gave her amounts due from the 5% with discount).
In order to estimate the cost of this solution, one should divide the per cent of the discount by the per cent of the amount get from the sale after applying the factoring, that is:

Next, knowing that the average payment is finding its way to the enterprise after 45 days, and at the assumption that the year has 360 days, we receive the effective annual cost of the factoring:


So cost of the factoring applied by the firm, is considerable and it is likely that it is exceeding the cost of financing this company.
We should however remember, that of applying the factoring in the result, the company is not having incur the costs connected with the vindication of the amount due, amount 70 000€, directly will inflow into the firm and, what is more important, the factor takes the risk connected with the financial problems and eventually bankruptcy of firm customers from it. If costs of the vindication of the amount due we will mark as [A], amount of the amount due of the enterprise as [B], opportunities cost connected with freezing funds in amounts due as [C], and risk as [D] (it will lower as a result of applying the factoring), it about applying the factoring in the following way will influence the influence of the decision to the value of the company:

Costs of the vindication of the amount due [A], lowering, can influence lowering of costs (but they must not, if the cost connected with the factoring exceeds them), and it influences value of forecast financial flows and the firm value. Level of the amount due [B], as a result of lowering, is increasing the firm value as a result of freeing the amount previously tied in the working net capital. Opportunities cost [C] lowering, they are increasing the level of forecasted free cash flows and by it influence the firm value. Assumed risk through of factor [D] first influences the expected firm lifetime (n), and what behind it is going, contributing to the height of the value company, at the same time fall in the risk, can influence the rate of cost of capital raised by the company from different sources and in this way, by lowering it after which forecasted free cash flows are being discounted, the value of the firm is changing.

Example 2. The firm is considering use of the factoring in order to shorten the operating cycle.
Data concerning the example is in Table 1.

Table 1. Influence of the factoring on the firm value (in thousand PLN)

   without the factoring    with the factoring    Change
CR (Cash revenues)    720    720    0
CE (Cash expenses)    316,8    324    7,2
NCE (non-cash expenses)    50    50    0
EBIT (earnings before interest and taxes)    353,2    346    -7,2
NOPAT (net operating profit after taxes)    286,092    280,26    -5,832
NCE (non-cash expenses)    50    50    0
∆ NWC (net working capital growth)    0    0    0
Capex (capital expenditures)    50    50    0
CF(1…n-1)    286,092    280,26    -5,832
RCP    30    0    -30
ICC    20    20    0
fixed assets    350    350    0
Accounts receivable    60    0    -60
Inventory    40    40    0
Cash    21,6    21,6    0
nonfinancial current liabilities    20    20    0
ke (rate of the cost of the shareholders equity)    30%    29%    -0,01
kd (rate of the cost of the debt)    11%    10%    -0,01
participation of the debt in capital (D/(D+E))    50%    50%    0
CF(0)    -451,6    -391,6    60
CF(n)    737,692    671,86    -65,832
Rate of the cost of capital    19%    19%    -0,00905
Expected period (in years)    10    10    
NPV    846,705    915,106    68,401
Source: hypothetical data

In this example was assumed that a full factoring was being considered. Hence we have the reduction in rates of costs of capital financing the firm resulting from the fact that the part of the operating risk is taken over through of factor thanks of the guarantee function. In another way, the effect of the reduction in the risk would be smaller in rate of the cost of capital, and result in firm value change could not appear.
As can be seen, in the example, applying the factoring is contributing to the increase in the value of the firm (NPV increase).

4. SUMMARY
Steering the operating cycle is counting and he influences the value of the company. Applying the factoring which can also influence is one of methods of shortening this cycle for curbing the operating risk but because of that for lowering rates of the cost of capital financing the enterprise.
The basic financial purpose of an enterprise is maximization of its value. Operating cycle management should also contribute to realization of this fundamental aim. The enterprise value creation strategy is executed with a focus on risk and uncertainty. This paper presented the consequences for the firm that can result from changes in operating cycle and operating risk that are related to using factoring as instrument to short target operating cycle of the firm and advantages resulting in risk reduction caused by transferring it to factor.

REFERENCES

1)        Grzywacz J., The Factoring (in Polish: Faktoring), Difin, Warsaw 2001.
2)        Hundley G., C. K. Jacobson, S. Ho Park, Effects of Profitability and Liquidity on R&D Intensity: Japanese and U.S. Companies Compared; The Academy of Management Journal, Vol. 39, No. 6, 1996.
3)        Kalberg J. G., K. L. Parkinson, Corporate liquidity: Management and Measurement, IRWIN, Homewood 1993.
4)        Pluta W., Michalski G., Short-term capital management (in Polish: Krótkoterminowe zarządzanie kapitałem), CHBeck, Warsaw 2005.
5)        Sierpińska M., D. Wędzki, Managing The Financial Liquidity In The Enterprise (in Polish: Zarządzanie płynnością finansową w przedsiębiorstwie), WN PWN, Warsaw 2002.
6)        Sizer J., Some Implications for Operational Research in the Area of Inflation as It Affects a Company's Profitability and Liquidity, Operational Research Quarterly (1970-1977), Vol. 28, No. 1, Part 2, 1977, p. 125-137.
7)        Skowronek-Mielczarek A., Sources of Financing the SME (in Polish: Małe i średnie przedsiębiorstwa: źródła finansowania), C.H. Beck, Warsaw 2003.
8)        Słoński T., Financing Current Financial Decisions (In Polish: Finansowanie działalności bieżącej), [in:] SME Finance (in Polish: Finanse małych i średnich przedsiębiorstw), W. Pluta (ed.), PWE, Warszawa 2004.
9)        Stecki L., The Factoring in the Commercial Practice (in Polish: Faktoring w praktyce handlowej, Dom Organizatora TNOiK, Toruń 1995.


Streszczenie
FAKTORING I JEGO WPŁYW NA WZROST WARTOŚCI PRZEDSIĘBIORSTWA FAKTORANTA
Podstawowym finansowym celem zarządzania przedsiębiorstwem jest wzrost jego wartości. Zarządzanie cyklem operacyjnym powinno także przyczyniać się do realizacji tego podstawowego celu.  Strategia wzrostu wartości przedsiębiorstwa jest realizowana w warunkach ryzyka i niepewności. Niniejszy artykuł przedstawia konsekwencje dla firmy, jakie niesie ze sobą zastosowanie faktoringu jako narzędzia skracającego cykl operacyjny i opisuje spodziewane korzyści w zakresie zarządzania wartością przedsiębiorstwa.


Sumary
The basic financial purpose of an enterprise is maximization of its value. Operating cycle management should also contribute to realization of this fundamental aim. The enterprise value creation strategy is executed with a focus on risk and uncertainty. This article presents the consequences for the firm that can result from changes in operating cycle and operating risk that are related to using factoring as instrument to short target operating cycle of the firm and describes expected advantages in corporate value management.
 

michalskig
 
michalskig: FINANCIAL EFFECTIVENESS OF INVESTMENTS IN OPERATING CASH BALANCES IN AGRICULTURAL AND PROCESSING ENTERPRISES



Grzegorz Michalski

ABSTRACT
The basic financial purpose of enterprise is creation of its value. Liquidity and operating cash management should also contribute to realization of this fundamental aim. The enterprise value creation strategy is executed with a focus on risk and uncertainty. Enterprises hold cash for a variety of different reasons as transactional, or precautionary, or speculative. The paper analyzes the relation between these kinds of cash balances and risk. In the paper presented is discussion about relations between enterprises net working investment policy and as result operating cash balances and enterprise value and as a result, the paper contain propositions for marking levels of precautionary cash balances and speculative cash balances in agricultural and processing enterprises. Application of these propositions should help managers to make better decisions to maximize the value of enterprises.

Keywords: enterprise value, current assets investments, cash management models, working capital, value based management


1. INTRODUCTION
Liquidity management requires that a sufficient balance of cash and other working capital assets - receivables and inventories – should be ensured . If the level of liquid assets is not adequate, it enhances the enterprise operating risk: loss of liquidity. Maintenance of working capital assets generates costs, thus affecting the enterprise profitability. The problem of the paper is how liquidity can be combined with profitability in agricultural and processing enterprises.
Entrepreneurial cash management depends on demands for cash in a enterprise. The aim of cash management is such that limiting cash levels in the enterprise maximizes owner wealth. Cash levels must be maintained so as to optimize the balance between costs of holding cash and the costs of insufficient cash. The type and the size of these costs are partly specific to the financial strategy of the enterprise.

In addition, cash management influences enterprise value, because its cash investment levels entail the rise of alternative costs, which are affected by net working capital levels. Both the rise and fall of net working capital levels require the balancing of future free cash flows, and in turn, result in enterprise valuation changes.

If the level of liquid assets is too low, then a enterprise may encounter problems with timely repayment of its liabilities, while discouraging clients by an excessively restrictive approach to recovery of receivables or shortages in the offered range of goods. Therefore, the level of liquid assets cannot be too low.

Fig. 1. Enterprise liquidity level vs. profitability

source: own study.

At the same time (as we can see at fig. 1), surplus liquid assets may negatively affect the company’s profitability. This is because upon exceeding the "necessary" level of liquid assets, their surpluses, when the market risk remains stable, become a source of ineffective utilisation of resources.
Along with an increased risk of the company’s daily operations, you should increase the level of liquid assets to exceed the required levels as this will protect your company against negative consequences of unavailable liquid assets. It is possible to measure profitability of liquidity management decision in two ways. Firstly, it is possible to check how it affects the net profit and its relation to equity, total assets, or another item of assets. Secondly, it is possible to assess profitability in relation to value of the company.
Individual elements influencing liquidity management decisions affect the level of free cash flows to firm (FCFF) and thus the value of the company. Let us assume that the company is faced with a decision regarding the level of liquid assets. As we know, a higher debtors turnover ratio and inventory turnover ratio (resulting from a more liberal approach to granting a trade credit for the purchasers and offering a shorter turnaround on clients’ orders) will be accompanied by more sales (larger cash revenues) but also higher costs.  

Fig. 2. Liquid assets influence on value of the corporation

where FCFF = free cash flows to firm; ∆NWC = net working capital growth; k = cost of the capital financing the corporation; and t = the forecasted lifetime of the corporation and time to generate single FCFF.
Source: own study.

Profitability measured by ROE indicates that “medium” liquidity level is optimal. Similar results will be achieved if estimating influence on the company’s value (see fig. 2.).
Again, the optimal variant was one that assumed a "medium" liquidity level as applying such level of liquidity ensures potentially the highest increase in the company‘s value measured by ∆V.
If the level of liquid assets is too low, it downsizes the sales thus discouraging clients with an overly restrictive trade credit policy. On the other hand, excessive exposure to liquid assets under the “high” level of liquid assets variant generated higher sales revenues than under the “medium” variant, but at the same time the positive result of increase in the sales volumes has been offset by high level of generated costs.
If the advantages of holding cash at a chosen level are greater than the influence of the alternative costs of holding cash, thereby increasing net working capital, then firm’s value will also increase. The net working capital (current assets less current liabilities) results from lack of synchronization of the formal rising receipts and the real cash receipts from each sale. Net working capital also results from divergence during time of rising costs and time, from the real outflow of cash when a firm pays its accounts payable.

(1)
Where: NWC = Net Working Capital, CA = Current Assets, CL = Current Liabilities, AAR = Accounts Receivables, ZAP = Inventory, G = Cash and Cash Equivalents, AAP = Accounts Payables.

When marking free cash flows, cash possession and increased net working capital is the direct result of amounts of cash allocated for investment in net working capital allocation. If an increase of net working capital is positive, then we allocate more money for net working capital purposes and thereby decrease future free cash flow. It is important to determine how changes in cash levels change a firm’s value. Accordingly, we use equation, based on the premise that a firm’s value is the sum of its discounted future free cash flows to the firm.


(2)
Where:    ∆Vp = Firm Value Growth, ∆FCFFt = Future Free Cash Flow to Firm Growth in Period t,  k = Discount Rate .  
Future free cash flow we have as:

(3)
Where:     CRt = Cash Revenues on Sales, FCWD = Fixed Costs, VCt = Variable Costs in Time t, NCE = Non Cash Expeses (i.e. Depreciation), T = Effective Tax Rate, NWC = Net Working Capital Growth, Capex = Operational Investments Growth.

Changes in precautionary cash levels affect the net working capital levels and as well the level of operating costs of cash management in a firm. Companies invest in cash reserves for three basic reasons:
First, firms are guided by transactional and intentional motives resulting from the need to ensure sufficient capital to cover payments customarily made by the company. A firm retains transactional cash to ensure regular payments to vendors for its costs of materials and raw materials for production. As well, a firm retains intentional cash for tax, social insurance and other known non-transactional payment purposes.
Second, firms have precautionary motives to invest in cash reserves in order to protect the company from the potential negative consequences of risk, which are unexpected, negative cash balances that can occur as a result of delays in accounts receivable collection or delays in receiving other expected monies.
Third, companies have speculative motives  to retain cash reserves. Speculative cash makes it possible for the firm to use the positive part of the risk  equation to its benefit. Companies hold speculative cash to retain the possibility of purchasing assets at exceptionally attractive prices.

Figure 3: Reasons for Holding Cash by Companies and Their Relation to the Risk.


Source: own study

2. VALUE BASED STRATEGY IN WORKING CAPITAL MANAGEMENT
The issue discussed here attempts to address the question of which net working capital management strategy should be applied to bring the best results for a specific type of business. Financial decisions of a company always focus on selecting the anticipated level of benefits in conditions of risk and uncertainty. Decisions regarding net working capital management strategy, whether focused on assets (strategy of investing in the net working capital) or liabilities (strategy of financing the net working capital), affect free cash flows and the cost of capital financing the company. The principle of separating financial decisions from operating decisions, i.e. separating consequences of operations from changes in the capital structure, calls for a need to take the net working capital management decision first focusing on assets (it affects free cash flows to the company) and then on liabilities (it affects the structure and cost of capital used for financing the company).    

Management of net working capital aimed at creation of value of the company. If the benefits of maintaining net working capital at the level determined by the company outweigh the negative influence of the alternative cost of such maintenance, then an increase in net worth of the company will be reported.
Interesting from our point of view, determined by the need to obtain the main objective of the company’s financials management, is how a change in the net working capital level may impact the value of the company.
Net working capital is, most generally, the portion of current assets financed with permanent funds. The net working capital is a difference between current assets and current liabilities or a difference between permanent liabilities and permanent assets. It is a consequence of dichotomy between the formal origination of the sales revenue and the actual inflow of funds from recovery of receivables and different times when costs are originated and when the funds covering the liabilities are actually paid out.
When estimating free cash flows, maintaining and increasing net working capital means that the funds earmarked for raising that capital are tied. If the increase is positive, it means ever higher exposure of funds, which reduces free cash flows for the corporation. An increase in production usually means the need to boost inventories, receivables, and cash assets.  A portion of this increase will be most probably financed with current liabilities (which are also usually automatically up along with increased production volumes). The remaining part (indicated as an increase in net working capital) will need an alternative source of financing.
Current asset financing policies are driven by the manner of financing current assets. Any changes to the selected current asset financing policy affect the cost of capital but do not impact the level of free cash flows. The company can choose one of the three policies:
a) an aggressive policy whereby a major portion of the company's fixed demand and the entirety of its volatile demand for financing current assets is satisfied with short-term financing.

Fig. 4. Aggressive strategy

Source: own study

b) a moderate policy aiming to adjust the period when financing is needed to the period when the company requires given assets. As a result of such approach, a fixed portion of current assets is financed with long-term funds, while the volatile portion of these assets is financed with short-term funds.
c) a conservative policy whereby both fixed and volatile levels of current assets are maintained with  long-term financing.

Fig. 5. Conservative strategy

Source: own study

The aggressive policy will most probably mean the highest increase in the net worth of the company. However, this result is not that obvious. This is because an increase in financing with an external short-term capital and a decrease in financing with an external long-term capital (namely shifting from conservative to aggressive policy of financing current assets) means enhanced risk level. Such increased risk level should be reflected in an increased cost of own capital. This stems from increased costs of financial difficulties.

The aggressive policy of financing current assets is the least favourable, considering an increased cost of own capital.
Policies regarding investments in current assets are applied by the company as measures determining amounts and structure of current assets. There are three major policies available:
a) an aggressive policy whereby the level of tangible assets is minimised and a restrictive approach to merchant lending is applied. Minimising current assets results, on the one hand, in savings which later translate to higher free cash flows. On the other hand, insufficient level of current assets increases the operational risk. Too low inventories may interrupt the production and sales process. Insufficient level of receivables will most often lead to a restrictive merchant lending policy and, consequently, potentially lower sales revenue than in the case of a liberal merchant lending policy. Insufficient transactional cash levels may disrupt settlement of liabilities and as a result negatively affect the company’s reputation.  
b) a moderate policy whereby the level of current assets, and in particular inventories and cash, is held on an average level.
c) a conservative policy whereby a high level of current assets (and especially inventories and cash) is maintained at the company and ensuring a high level of receivables by using a liberal trade creditors recovery policy.

If the company aims at maximising ΔV, it should select the aggressive policy. However, similarly as in the preceding item, it is worth considering the relation between the risk increase and the cost of own capital (and probably also external capital). The more aggressive the current asset investment policy, the higher risk. Higher risk, on the other hand, should be accompanied by higher costs of  own capital and probably also external capital.

Changes of the policy, from conservative to aggressive, cause an increase in the cost of capital financing the company's operations due to enhancement of risk. It is possible that in specific circumstances, the risk may drive the cost of capital to such a high degree that the aggressive policy will be unfavourable.
In the discussed examples, the company should select a conservative current asset financing strategy and an aggressive current asset investment policy.
The primary objective of financing the company’s operations is to maximise the company's net worth. It can be estimated among others by totalling all the future free cash flows generated by the company, discounted with the cost of capital. Decisions regarding management of net working capital should also serve the purpose of achieving the primary objective, that is maximising the company’s net worth. These decisions may impact both the level of free cash flows and the cost of capital used for financing the company’s operations. The module discusses probably changes of the capital cost rate, resulting from changes in selection of the net working capital management policy and, consequently, the anticipated impact of such decisions on the company's net worth.

3. VALUE BASED STRATEGY IN CASH MANAGEMENT
The most liquid current assets are cash balances. The purpose of cash management is to determine the level of cash resources at the company so that it increases the wealth of the company owners. In other words, the objective is to maintain such level of cash resources at the company that is optimal from the point of view of trade-off between the costs of maintaining cash balances against the costs of holding insufficient cash balances. The type and amount of these costs is partially driven by the particular financial policy applied by the company.
Based on observation of current inflows and outflows of the company, it may be noticed that there are four basic situations at the company in terms of operational cash flows:
1.    when future inflows and outflows are foreseeable and inflows exceed outflows,
2.    when future inflows and outflows are foreseeable and outflows exceed inflows,  
3.    when future inflows and outflows are foreseeable but it is impossible to determine which are in excess of which,
4.    when future inflows and outflows are not foreseeable.

Depending on the type and volumes of inflows and outflows at the company, it is possible to select one of the four models of cash flow management.  It is certainly not necessary for only one of the above situations to prevail at the company. The same business may have periods when inflows exceed outflows on a permanent basis, as well as periods when a reversed trend is noted or it is not possible to determine the trend. It is similar in case of projecting future inflows and outflows. It is possible that in some periods of time inflows and outflows can be projected without any major difficulty, while in other periods such projection is very hard or completely impossible.

Using information about future cash inflows and outflows, we are able to apply, for example, the Baumol model or the Beranek model. If we anticipate that cash inflows are greater than outflows, we are able to use the Beranek model [W. Beranek 1963 also: F. C. Scherr 1989, pp. 131-132] to determine cash flow management within a firm. On the other hand, if we predict that cash outflows are greater than inflows we use Baumol model [W. Baumol 1952]. When we cannot forecast long-term cash flows, for a period longer than approximately 14 days, we are able to use the Stone model [B. Stone 1972; T. W. Miller 1996] to determine cash flow management. However, when we cannot predict future cash inflows and outflows at all, the Miller-Orr model  can be used to determine cash flow management.


According to the BAT model assumptions, the company receives both regular and periodic cash inflows, while it spends cash in an ongoing manner, at a fixed rate. At the time of receiving funds, the company earmarks a sufficient portion of these funds to cover its outflows. This is performed until the next inflow of cash. This model can be recommended in a situation when future inflows and outflows related to operations of the company can be foreseen and, at the same time, operational outflows exceed inflows. The BAT model comprises two types of assets: cash and (external) marketable securities, which generate profit in the form of interest during each period.

Fig 6. BAT model

Source: P. J. Beehler, Contemporary Cash Management, J. Willey & Sons, New York 1978, p. 191.

The BAT model has been developed for two reasons: in order to specify the optimal cash balance at the company and to suggest how the company managers should proceed to ensure optimal cash management.  
The company which decides to follow recommendations regarding cash management, arising from the BAT model, determines an optimal cash level C*bau.
It stems from the BAT model that when cash is spent, the company should secure cash from non operational sources of cash. Most often, this means that it should sell (external) securities, close the held deposit, and/or raise a short-term loan.  The total amount of raised funds should be in each event twice as high as an average cash balance. The ratio of the total demand for cash in a given period and one transfer, provides information on how many such operations must be performed during the year. It is clear that if conditions, which enable application of the BAT model, have existed at the company for less than one year, then shorter periods should be taken into account.

Fig 7. Beranek model

Source: own study
 
The basic assumption of the Miller-Orr model is that changes in cash balance at the company are unforeseeable. The company managers react automatically when cash balance equals either the upper or lower level. This model is presented in the figure.

Fig. 8. Miller-Orr Model

Source: P. J. Beehler, Contemporary Cash Management, J. Willey & Sons, New York 1978, p. 193.

Reacting to the situation when the cash balance at the company reaches the upper or lower limit, the management board buys or sells (external) short-term securities, opens or closes short-term deposits and/or repays or raises a short-term loan in order to restore the target cash balance Cmo*.
This model is used traditionally in such a manner that the management board of the company first specifies the lower limit of cash L that it finds acceptable. This value is specified subjectively based on experience of the company managers. As in a sense it is a minimum level of cash balance, it depends on such factors as availability of the company's access to external financing sources. If in the opinion of the management board members this access is easy and relatively inexpensive, liquidity at the company is lower and L can be set on a relatively low level.
The Miller-Orr model assumes that the target cash balance C* depends on the (alternative) costs of holding funds, costs of cash shortages (transfer) and variants of cash flows during the considered period (this period must equal the period for which an interest rate has been set). The level of variance of cash flows during the analysed period is best determined based on historic data.
The target cash balance according to the Miller-Orr model is calculated based on the formula for C*mo:
In this model, after setting the target cash balance C*mo the upper limit U* is determined as a difference between triple target cash balance and double lower control limit.

The Stone model is a modification of the Miller-Orr model for the conditions when the company can forecast cash inflows and outflows in a few-day perspective. Similarly to the Miller-Orr model, it takes into account control limits and surpassing these limits is a signal for reaction. In case of the Stone model, however, there are two types of limits, external and internal, but the main difference is that in case of the Stone model, such signal does not mean an automatic correction of cash balance as in the Miller-Orr model.

Fig. 9. Stone Model

Source: own study

If the cash balance exceeds the upper external limit H1 or the lower external limit H0, the management board analyses future cash inflows by projecting future cash balance by calculating the S level.
If the S level (determining the cash balance after n days from the moment of surpassing either of the external control limits) continues to surpass any of the internal limits, the management board should prevent variations from the target balance by purchase or disposal of securities in the amount sufficient for the cash balance at the company to be restored to its optimal level Cs*.
This model is presented in Figure 4. It shows that the cash balance has been growing as from the beginning of the analysed period. At some point, it exceeded the upper internal limit U*. Then it exceeded the external control limit H1. At the time of exceeding the external control limit, the management board of the company forecast future inflows and outflows. As the forecast indicated that the cash balance would continue to exceed the internal control limit (the grey line), the management board decided to adjust this level to the anticipated C*. After the appropriate adjustment, the cash balance started to decrease after a few days and it surpassed the lower external control limit.  Another forecast was prepared and it turned out that for several days the cash balance would remain below the lower internal control limit.  Therefore, the cash balance was reduced down to C*S.
4. CASH BALANCE FORECASTING
Maintaining the appropriate cash balance requires not only ongoing monitoring of the currently held current assets and liabilities that mature in the forthcoming future, but also those that should be anticipated in the future. Therefore, it is necessary to plan future cash inflows and outflows .
Cash forecast is performed based on cash budget. This tool contains a forecast of recovered receivables, expenditure on inventories and repayment of liabilities. It provides information about the cash balance, as cash balance is a result of inflows from sales (payment of receivables) and outflows due to purchase of materials and other costs of the company.
Cash budget is most often prepared several periods in advance subject to the company’s information capabilities and needs. The most popular version of a cash budget is one prepared for six monthly periods. However, there are no reasons why cash budgets should not be prepared for six weeks or six biweekly periods. In any case, the rolling wave planning is used, which requires that subsequent periods be added to the budget on an ongoing and regular basis so that at any one time the company has a forecast for the fixed number of forecast periods (namely, if the budget is prepared for 8 biweekly periods, then it should be adequately extended when required so that a sixteen-week budget is available at any time). This requirement ensures for the budget to be constantly valid and applicable. Six-month budgets are most frequently prepared based on monthly time bands. For some companies it is absolutely necessary to determine inflows and outflows for individual weeks and sometimes even days. The more detailed the control of cash inflows and outflows, the more probable the precise and correct control of cash flow levels.  When developing a cash budget, it is a matter of top priority to hold a forecast of the company’s sales revenues. Preparing such forecast is the primary and at the same time the hardest task. Next, the demand arising from the held fixed assets and inventories, resulting from production of goods for sale, is forecast. This information is combined with information on delays in recovery of receivables. Also tax due dates, interest due dates, and other factors are taken into account.

5. PRECAUTIONARY CASH MANAGEMENT - SAFETY STOCK APPROACH
Current models for determining cash management, for example Baumol, Beranek, Miller-Orr or Stone models, assign no minimal cash level, and are based on the manager’s intuition. In addition, these models are based inventory managements models. In this study, we address the potential for adaptation of these methods of determining safety stock to determine minimal cash levels in the firm. Safety stock is a result of information about the risk of inventories. To calculate safety stock we use Equation 4 [M. Piotrowska 1997, p. 57]:


(4)
Where: zb = Safety Stock, C = Cost of Inventories (in percentage), Q = One Order Quantity, v = Cost of Inventories (Price), P = Yearly Demand for Inventories, s = Standard Deviation of Inventory Spending, Kbz = Cost of Inventories Lack.

It is also possible to apply the following equation to determine minimal cash level [G. Michalski 2006]:


(5)
Where:    LCL = Low Cach Level (Precautionary Cash Level), k = Cost of Capital, G* = Average Size of One Cash Transfer  which are the basis of standard deviation calculation, P = the Sum of all Cash Inflows and Outflows in the Period, s = Standard Deviation of Daily Net Cash Inflows/Outflows, Kbsp = Cost of Cash Lack.

Part of the information necessary to determine LCL, still requires the manager‘s intuition. For example, costs of lack of cash, contains not only costs known from accountant records, but also other costs, such as opportunity costs. Precautionary cash reserves are, first of all the result of anxieties before negative results of risk. Its measure is the standard deviation.

Example 1. Managers of the firm X, value the cost of the lack of cash as 5000. The day′s standard deviation of cash inflows/outflows is 35,466 monthly. Average single cash inflow/outflow is 27,250. The monthly sum all cash inflow/outflow is: 817,477. The alternative cost of capital is 18%.

For the firm X, precautionary cash level is:

When cash outflows and inflows volatility is 0, precautionary cash balance is also 0:

Then we can estimate net working capital growth:

The standard deviation is 35,466 and tax rate is 20%. So, we can estimate yearly alternative cost precautionary cash reserves and the influence on the value of the firm:
;

As demonstrated in order for the precautionary cash balance to remain level, with the standard deviation equal to 35,466; a decrease in the firm’s value of 257,330 results.

6. SPECULATIVE CASH BALANCE MANAGEMENT - OPTION APPROACH
All firms do not necessarily hold speculative cash balances. Speculative cash is held in order to utilize the positive part of the risk equation. Firms want to retain opportunities that result from price volatility. For example, in the ordinary practice of Polish firms, we see that speculative cash balances can be useful to benefit from transactions in foreign exchanges. It can be profitable for firms to purchase necessary products or services in foreign exchange at prices cheaper than its average purchase price. Such purchase is possible if the firm maintains speculative cash balances. Speculative cash balances give the firm the ability to use of their purchasing power any time. Such cash superiority over other assets shows option value of speculative cash balances .
Example 2. The entrepreneur can choose from one of two possibilities:
•    He can to invest in the firm activity, for example, he can purchase in foreign exchange,
or
•    He can decide to hold cash (national currency).

Entrepreneur make the decision between these two possibilities at least once every day. The purchase of foreign exchange and its use in the operating activity of a firm makes other cash resources inaccessible for continued speculation. If the entrepreneur chooses to hold cash, he still has the possibility to purchase foreign exchange. Yet, foreign exchange price changes from day to day. The daily standard deviation of the foreign exchange price is 4%. This means that the foreign exchange price today is 1.00 PLN. The next day the foreign exchange price can be 1.04 PLN with the probability 0.5; or 0.96 PLN with the probability 0.5.
Suppose that next, the foreign exchange price meets its long-term value of 1.00 PLN. If on the first day, an entrepreneur decides to hold cash, and the next day′s foreign exchange price falls to the level of 0.96 PLN (lower than its expected value), the entrepreneurs expected income will be 0.04 PLN. On the other hand, if the foreign exchange price reaches the level of 1.04 PLN (above its expected value), then the entrepreneur won't purchase foreign exchange, and his expected income will be 0 PLN. So, if an entrepreneur has cash for 10,000 foreign exchange units, his expected value of the benefit of holding in national currency (in cash) by one day, will be:

The daily alternative cost of capital financing for the firm is:

Therefore, we can also express it for 10,000 foreign exchange units:
.
This means that the expected benefit is 199.9 PLN. This demonstrates the basis for holding speculative cash balances in a firm. Of course, the size of speculative cash balances should be an effect of the firm’s customary activities and its real operational needs. The legitimacy of holding speculative cash balances increases here together with the increase of volatility of foreign exchange pricing (or volatility of the price of any other assets necessary to the firm) and grows smaller together with the height of the alternative costs of capital financing for the firm.


7. CONCLUSION
Liquid assets management decisions are very complex. On the one hand, when too much money is tied up in working capital, the business face higher costs of managing liquid assets with additional high alternative costs. On the other hand, the higher liquidity assets policy could help enlarge income from sales. Firms hold cash for a variety of different reasons. Generally, cash balances held in a firm can be called considered, precautionary, speculative, transactional and intentional. The first are the result of management anxieties. Managers fear the negative part of the risk and hold cash to hedge against it. Second, cash balances are held to use chances that are created by the positive part of the risk equation. Next, cash balances are the result of the operating needs of the firm. In this article, we analyze the relation between these types of cash balances and risk. This article also contains propositions for marking levels of precautionary cash balances and speculative cash balances. Application of these propositions should help managers to make better decisions to maximize the value of a firm.

REFERENCE
1.    BEEHLER P. J., Contemporary Cash Management, J. Willey & Sons, New York 1978.
2.    BAUMOL W., The Transactions Demand for Cash: An Inventory Theoretic Approach, Quarterly Journal of Economics, October 1952, p. 545-556.
3.    BECK S. E., D. R. STOCKMAN, Money as Real Options in a Cash-in-Advance Economy,  Economics Letters, 2005, vol. 87, pp. 337-345.
4.    BECK S. E., The Option Value of Money, Working Paper nr 93-15, University of Delavare, Newark 1993.
5.    BERANEK W., Analysis for Financial Decisions, R. D. IRWIN, Homewood 1963, chpt. 11.
6.    INGERSOLL J., S. A. ROSS, Waiting to Invest: Investment and Uncertainty, Journal of Business, 1992, 65:1-29, pp. 5-6.
7.    MANESS T.S., J.T. ZIETLOW, Short-Term Financial Management, Dryden Press, Fort Worth 1998.
8.    MILLER M. H., D. ORR, Mathematical Models for Financial Management, [w:] Frontiers of Financial Management, South - Western Publishing Co., Cincinati, 1984, pp. 238-239.
9.    MILLER M.H., D. ORR, A model of the demand for money by firms, Quarterly Journal of Economics, Aug 66, Vol. 80 Issue 3, pp. 417-418.
10.    MILLER T. W., B. K. STONE, The Value of Short-Term Cash Flow Forecasting Systems, Advances in Working Capital Management, JAI Press Inc., Londyn 1996,  vol. 3, pp. 3-63.
11.    SCHERR F. C., Modern Working Capital Management. Text and Cases, Prentice Hall, Englewood Cliffs 1989.
12.    STONE B., The Use of Forecasts and Smoothing in Control - Limit Models for Cash Management, Financial Management, wiosna 1972, pp. 72-84.
13.    BRIGHAM E.F., Daves P.R., Intermediate Financial Management, Thomson, Mason 2004.
14.    GRAHAM J.E., Firm Value and Optimal Level of Liquidity, Garland, New York 2001.
15.    MANESS T.S., J.T. Zietlow, Short-Term Financial Management, Dryden Press, Fort Worth 1998.
16.    MOIR L., Managing corporate liquidity, Woodhead, Glenlake/Amacom, New York 1999.
17.    SCHERR F. C., Modern Working Capital Management. Text and Cases, Prentice Hall, Englewood Cliffs 1989.

Grzegorz Michalski PhD
Department of Corporate Finance and Value Management
Wroclaw University of Economics
michalskig.ue.wroc.pl/
Grzegorz.Michalski@ue.wroc.pl